Chatterjee aiming for ‘interim’ market fix

Source: Sam Mintz and Rod Kuckro, E&E News reporters • Posted: Friday, November 10, 2017

Federal Energy Regulatory Commission Chairman Neil Chatterjee is pushing for a near-term, interim solution to help keep “afloat” threatened coal and nuclear plants as his agency studies a longer-term way to ensure resilience.

FERC was forced into action by a September directive from Energy Secretary Rick Perry, who asked the independent agency to consider compensating coal and nuclear plants in certain regional electricity markets by allowing them to fully recover their costs.

FERC’s action, which Chatterjee reiterated today will be announced by Dec. 11, could take any number of forms.

But the chairman made clear he wants the commission to take some action to help struggling plants immediately, instead of “kicking the can down the road.”

“I’ve been pretty vocal about my desire to find both a long-term solution to potentially value resilience in our marketplace but also an interim solution to keep plants afloat so that we can do that longer-term analysis,” Chatterjee told reporters at the S&P Global Platts Energy Podium.

While he did not go into details about what mechanism FERC might use to support coal and nuclear plants, Chatterjee said he wants the interim step to be linked to a longer-term study as “an incentive to get both steps right.”

“The necessity of the interim step is that there is … real pressure on some of these resources that could retire in the course of time it could take for us to do the longer-term analysis to look at how to value resilience,” he said.

Complicating matters for the agency head is that he might not be in the position for very long. Kevin McIntyre, an energy lawyer at the firm Jones Day who has been tapped for the chairmanship by President Trump, was confirmed by the Senate earlier this month. He, along with Democratic Senate aide Richard Glick, are waiting to be sworn in, bringing the commission to its full complement of five.

Chatterjee said he still thinks his plan can win out.

“I needed one vote. Now I need two. I still feel confident that I can get there,” he said.

The former aide to Senate Majority Leader Mitch McConnell (R-Ky.) warned against extending discussion further without taking action.

“I think the worst outcome would be some kind of mealy mouthed, doesn’t-accomplish-anything study that just further punts this down the road. That to me has no value. It just continues to prolong and punt on these difficult questions,” he said.

“If it were up to me, I want to either find a solution and solve this question, or end it. Anything short of that, any kind of watered-down, long-term examination with no endgame in sight, that doesn’t interest me.”

FirstEnergy connection

Chatterjee also said he has met with Chuck Jones, president of the coal-heavy utility FirstEnergy Corp., which has been lobbying hard for FERC to adopt DOE’s proposal.

“We met with the FirstEnergy team, with our team at the commission, to really kick the tires on what they proposed and challenge them on some of what they had put forward,” he said.

In comments filed to FERC, FirstEnergy has been one of the loudest advocates for boosting coal (Energywire, Nov. 9). They wrote in a submission this week that “the Commission must act now” to “prevent today’s resilient generation from retiring prematurely.”

E&E News reported last week that Sean Cunningham, who lobbied for FirstEnergy for nearly a decade and is now a DOE official, was one of the key authors of the agency’s proposal.

Chatterjee said he has not met with another of the plan’s biggest supporters, Robert Murray, the CEO of coal producer Murray Energy Corp., which supplies coal to FirstEnergy plants.

Murray and FirstEnergy have both pitched the idea of “interim relief” or an “interim solution” along the lines of Chatterjee’s stated goal.

Litigation likely

“I think it’s a fair assumption” that litigation by power generators and others would be immediate if FERC proposes an interim solution, said Marty Durbin, executive vice president at the American Petroleum Institute.

API is among a coalition of oil and gas interests, electricity generators, and renewables developers that are jointly contesting Perry’s directive.

“It’s a solution in search of a problem, what DOE put out there,” Durbin said.

“There is no reliability problem. There is no resiliency issue because we don’t know what resiliency means — it hasn’t been defined,” he said. “You’ve got to define it before you decide whether you’re going to solve for it or not.”